Basil Read mining, a division of Basil Read, is looking to grow its business significantly over the next two years. Its strategic objective is in fact to double its turnover by the end of 2020 to R2 billion. And the division is already on track to hit its target in spite of the ongoing mining recession thanks to the implementation of initiatives designed to boost productivity through asset optimisation and a rapidly expanding order book, Basil Read Executive Officer: Mining K2 (Khathutshelo) Mapasa tells Laura Cornish.
Despite the commodity downturn and the loss of two major contracts in 2015 due to liquidation (Discovery Metals’ Boseto copper mine in Botswana) and business rescue procedures (Evraz Highveld Steel and Vanadium’s Mapochs magnetite iron ore mine in South Africa), Mapasa is determined to grow Basil Read’s mining division.
Considering the company has begun work on a number of new contracts while celebrating phenomenal success assisting two major clients reduce their surface mining contract costs significantly while simultaneously improving productivity, it is unlikely Basil Read will fail to meet its objectives.
In addition to increasing its turnover, Mapasa also wants to increase the division’s profit margin. “To deliver both of these targets we need to increase our order book from its current R4.2 billion to R6 billion and increase our on-site productivity levels as well.”
Mapasa breaks down the strategy into five key deliverable areas:
- Grow the order book
a. Expand and grow its scope of work through the existing operational order book:
E.g. Encourage clients to allocate more time and investment to transitioning their opencast teams to underground for life extension projects (where applicable) and allow Basil Read to take full responsibility for remaining lifespan of open pit mining;
b. Secure new clients and diversify into new areas and commodities. With the focus being on Namibia, Botswana, Lesotho and Zambia at present;
- Asset optimisation – properly utilise equipment to maximise productivity while reducing costs;
- Make Basil Read a great place to work
- Secure sufficient capital expenditure by fostering relationships with traditional financiers and banking institutions.
Asset optimisation showcases massive cost saving potential
The term asset optimisation has become a new buzzword for the mining sector in its attempt to extract maximum operational value and production without additional cash investment.
Basil Read is showcasing the real value of asset optimisation (within surface mining specifically) having delivered a massive double digit percentage reduction in costs for De Beers’ Venetia mine in Limpopo towards the middle of 2015. The company is highly exposed to the diamonds sector – Mapasa notes that approximately 47% of the mining division’s revenue is generated from this industry.
With 550 employees on site are employed by Basil Read, reducing costs did not include retrenchment, Mapasa notes. “To assist De Beers reduce its cost output we re-evaluated our equipment on site, reviewed planning inefficiencies and ultimately were able to increase production by better utilising the same the equipment already in operation. In some instances we were even able to reduce our fleet component.”
It’s all in the numbers
In July 2014, Basil Read commenced with its mining contract for AIM-listed copper junior Weatherly International’s Tschudi project in Namibia. Its target was to reach a steady-state 650 000 BCMs (bank cubic metres) per month within a 12 month time frame.
“To compensate for a deteriorating copper price, we not only exceeded the client’s request to accelerate our ramp-up period by March 2015, but also exceeded steady-state production and in June delivered 800 000 BCMs per month without additional mining equipment, enabling Weatherly International to produce and maintain a profitable margin,” Mapasa reveals.
Basil Read’s contract with Weatherly stretches to December 2018 with the option to extend by a further two years. The company is also assisting expand Tschudi’s leach pad which will see the surface mining specialist increase its production to over 1 million BCMs for the next six months.
“In essence, we were able to make fundamental changes to Tschudi’s productivity utilising the same equipment more effectively and are extremely proud of our achievements to date for this project.” Because the operation represents one of Basil Read mining’s most remote projects, the company also has to ensure it remains self-sufficient by maintaining its mining fleet regularly to prevent breakdowns and deliver maximum availability.
An array of new projects
In 2015 Basil Read acquired two new contracts – a full drill and blasting management project for Harmony Gold’s Kalgold open pit mine in the North West province as well as a drill and blast project for Pilanesburg platinum mine on the Western Limb of the Bushveld Complex.
Mapasa points out that the Pilanesburg operation represents opportunity for the company to expand its contract scope to include waste stripping and possibly joining the two pits – “which aligns perfectly with part of our growth strategy.”
The company’s exposure to diamonds also remains strong – the company has secured a niche earth moving contract for Debswana’ Jwaneng Cut 8 North East corner in Botswana through its joint venture with Bothakga Burrow and in April 2016 it commenced with its new mining contract for Kimberley Diamonds’ Lerala project, also in Botswana.
Basil Read has proven its ability to assist clients effectively increase their production targets without additional cost – a factor which will continue to see its business outshine the recession and enable it to achieve its mid-term growth aspirations. MRA